The State of Michigan has adjusted a tax credit program to better benefit General Motors (NYSE: GM) as part of an agreement that will see the company investing more money in its Michigan based operations.
The tax credit program, which has been effective for over a decade, has been revised to reduce GM's maximum tax credit by $325 million to $2.28 billion over the next decade. The annual cap on GM's tax credit remains unknown. The revisions are part of an agreement between the automaker and the State of Michigan to increase GM's investment in the state to increase the number of available jobs and increase wages for Michigan based autoworkers. As part of the agreement, GM will raise the weekly wage of Michigan autoworkers from $650 to $1,300.
GM is set to invest $3.5 billion in its Michigan based operations as part of the deal, including a substantial investment in the company's Detroit-Hamtramck plant. The plant was previously under threat of closure until negotiations with United Auto Workers during last year's strike ruled out this possibility. The substantial investment is set to spur the production of electric vehicles, including electric pickup trucks and possibly electric Hummer branded vehicles. The Detroit-Hamtramck plant currently employs 800 workers working on the Chevrolet Impala; production is slated to end in February, after which renovations of the factory will begin to prepare it for electric vehicle production. After renovations, the plant will employ 2,000 workers once production reaches full capacity.
So far, the deal has been lauded for the economic boon it will bring to Michigan. Both the State of Michigan and GM have expressed their optimism at the mutual benefits of the lucrative tax deal and forthcoming investment. GM spokesman Dan Flores spoke of the deal, stating, "The approved MEGA amendment sets the stage for us to continue our significant commitment and investments in Michigan. Over the past decade, the Michigan MEGA has helped enable GM to invest more than $10 billion in its Michigan facilities."